Aid for Trade: Showing results

Remarks by Angel Gurría, OECD Secretary-General, delivered at the launch of the 3rd Global Review of Aid for Trade

17th July 2011 - 18 July 2011 Geneva, Switzerland

(As prepared for delivery)

Honourable Ministers, Excellencies, dear Pascal, distinguished participants, ladies and gentlemen; it is my great pleasure to be here with you to present the third joint OECD/WTO monitoring report "Aid for Trade at a Glance: Showing Results."

Back in 2007, I presented the first Aid for Trade at a Glance report. Then, in addition to our global analysis, the report provided detailed information on the 7 developing countries that took part in that first monitoring exercise.

In 2009, I returned and we had a much broader coverage of 85 developing countries. Now, in 2011, we have based our analysis not only on an equally high level of participation, but also on 275 aid-for-trade case stories, half of which were provided by developing countries.

The 2009 report argued that the international community needed to maintain momentum in the face of the Great Recession. The 2011 report shows that we did. The report paints a welcome picture of aid for trade contributing to better lives for women and men across the developing world.

It shows how aid for trade is becoming a growing priority for an increasing number of developing countries and donors; And how aid for trade is being connected to the broader development agenda, with strategies and priorities increasingly focusing on competitiveness and trade-led economic growth. This development demonstrates a clear change in mind sets. We are not just building new roads or bridges. We are witnessing a true economic transformation taking shape in the developing world.

In response to the aid for trade priorities, donors committed USD 40 billion in 2009. This translates to an average annual real growth rate of 15% since the start of the Initiative. The share of the low-income countries and consequently Sub-Saharan Africa has been steadily rising as has the share of regional and global programmes. Disbursements have been growing at a constant rate of between 11 and 12% for each year since 2006 – reaching USD 29 billion in 2009. Thus donors are meeting their commitments.

The outlook for aid for trade is stable. Last year in Seoul, G20 leaders committed to maintain, beyond 2011, at least the levels reached in the years 2006-8. Some OECD countries are confronted with large budget deficits and find it difficult to respond adequately to the higher demand for aid for trade. Fortunately, continued growth of South-South co-operation can become an important complement to the support provided by DAC donors.

In any event, we should continue to make the case for more Aid for Trade by demonstrating its value and usefulness: taking steps to better measure results is essential if we are to show that progress is being made towards the development objectives of the Aid-for-Trade Initiative

Last summer, Pascal and I jointly launched a call for the submission of case stories to probe deeper into the results of the almost USD 100 billion that have been spent on aid for trade between 2006 and 2009. We wanted to understand better the key ingredients of success or shortcomings and what we could learn from experiences so far.

In total, we received 275 case stories from more than 145 countries – ranging from the smallest states, such as Solomon Islands, and Comoros, to the largest, such as China – and covering all major developing regions and income categories.

Nearly half of them were submitted by developing countries, which emphasises the potential for knowledge sharing. They revealed the rising importance of South-South co-operation - not only that of middle-income countries helping low-income countries, but also of low-income countries helping each other.

Collectively, the stories provide a wealth of information on the efforts by developing countries, the donor community, the private sector, think tanks and NGOs to promote trade as an engine for growth and development. The sheer quantity of activities recounted in these case stories prove that aid-for-trade efforts are substantial across a wide spectrum of countries and are becoming more central to their development strategies.

Although not always easy to attribute cause and effect, the case stories nevertheless show clear results of how aid for trade programmes are helping developing countries build the human, institutional and infrastructure capacity that they require to integrate into regional and global markets and benefit from trade opportunities.

Many stories speak of demand-driven, technical capacity-building programmes that are helping countries define export-oriented growth strategies. Other stories highlight how aid has enhanced the capacity of trade officials to participate effectively in international negotiations, understand the implications of agreements and implement them once agreed. A large number of stories detail how industry-specific programmes address market failures to help the private sector better access foreign markets. Stories about aid programmes that assist private companies in meeting international standards report successes about becoming part of global value chains. Accounts of trade facilitation programmes and economic infrastructure projects, including regional corridors, describe how trade costs are significantly reduced.

The case stories cite several factors which are critical for success:

Ownership at the highest political level and active engagement of all domestic stakeholders, including the private sector and civil society ;

Long-term donor commitment and adequate and reliable funding;

Leveraging partnerships, including with providers of South–South co-operation;

Combining public and private investment with technical assistance; and

Supportive macroeconomic and structural adjustment policies as well as good governance are vital for delivering the longer-term trade and development objectives of the Aid-for-Trade Initiative.

They are merely the start of a learning process, rather than the end. We need to undertake many more follow-up activities to understand better the results of aid for trade in different contexts and their wider applicability. Such knowledge sharing should address the question of how to better demonstrate that aid for trade is a worthwhile investment for improving trade performance, generating economic growth and reducing poverty.

This is the objective of the OECD publication “Strengthening Accountability in Aid for Trade”, that provides good practices for strengthening results in aid for trade. In addition, it suggests that there is much to be gained from working together to measure progress towards partner countries’ trade development targets. Such approaches will further strengthen country ownership, the critical factor in ensuring the effectiveness of aid for trade.

Progress is being made in that respect: Not only have aid-for-trade flows been growing steadily, but aid-for-trade programmes are also being delivered more effectively. Developing countries are demonstrating greater ownership and there is clear evidence of broader stakeholder consultations. Donors continue to work towards harmonising their procedures and aligning their support around developing countries’ trade-related priorities.

These positive findings are consistent with the conclusions of the recent evaluation of the implementation of the Paris Declaration. The challenges of delivering aid for trade effectively are indeed not unique, but are part and parcel of the broader development effectiveness agenda. Improving aid quality and development effectiveness more broadly is not just an objective of the Aid-for-Trade Initiative, but also of the Fourth High Level Forum on Aid Effectiveness, which will be held from 29 November to 1 December 2011 in Busan, South Korea. Aid for trade will figure prominently in Busan, and we will showcase the Initiative as a prime example of what can be achieved by applying the Paris Principles on Aid Effectiveness. We will also use aid for trade to illustrate how aid can leveraged to deliver development outcomes.

In return, we expect Busan to provide us with valuable inputs on how to improve further our aid management framework to achieve trade results. Equally, we expect Busan to show how we can further expand our efforts to build trade capacity, for instance, through new financing modalities, and knowledge sharing.

We need to realize, however, that aid is only one source –albeit important for some- in the broader landscape of actors and approaches that support development. We need to welcome the opportunities that are presented by these different actors and approaches. And we need to work together to build on their achievements and innovations, some of which have been reported in the case stories. I hope that at the next Global Review we will be able to conclude that we have come one step closer to making the multilateral trading system more development friendly. Thank you.